It’s Crunch Time for Tesla as First Model 3 Units Hit Production

The much-anticipated Tesla Model 3 will start rolling off the production line this week, about two weeks earlier than planned. That marks an important milestone for the company—and for the electric vehicle industry—as Tesla gets closer to its goal of becoming a producer of mass-market electric cars.

The Tesla Model 3, which sells for $35,000 (before incentives), can travel about 215 miles on a single charge. It’s also fast—with acceleration from zero to 60 miles per hour in under six seconds. The Model 3’s combination of style, speed and affordability could allow the company to sell hundreds of thousands of EVs per year. In 2016, Tesla made about 85,000 vehicles.

While Tesla has proven its ability to produce attractive and capable luxury vehicles, observers are now focused on the company’s readiness to make them in higher volumes. Elon Musk, Tesla’s chief executive, said this week that Tesla plans to deliver the first 30 units in July. That would grow to 100 units in August and 1,500 units in September. Tesla is now targeting 20,000 Model 3 sales by December, after previously announcing a production goal approximately twice as big—the pace required for making about half-million vehicles per year.

Tesla on Monday said that it delivered 22,000 Model S cars and Model X sport-utility vehicles in the second quarter, lower than what analysts expected. The company pointed to a supply issue with battery packs, which raised concerns that a lack of batteries could impact production targets for the Model 3—and thus a potential delay in deliveries to eager deposit-holders. buyers.

The current backlog in Model 3 pre-orders, which require a $1,000 deposit, is reportedly about 300,000 customers. In April 2016, one month after the first Model 3 orders were taken, company executives said the number of deposits was “approaching 400,000.”

To prepare for the addition of the Model 3 to its lineup, Tesla built a $5 billion factory in Nevada to produce batteries for its electric vehicles. In April, also to prepare for the Model 3, Tesla announced that it will double the size of its charging network by the end of 2017. It will add new locations in city centers while expanding existing highway sites, so the growing ranks of drivers don’t have to wait for access to a public charger.

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